Are you a baby boomer that dreams of retiring before you turn 60? How about before you turn 50? Well, if you do, you might want to think twice before you make the move. If your heart is set on leaving work early you want to be sure to leave with the right mindset and the right estimation of your financial potential.  Early retirement can be done with the right financial plan.

Retire with a realistic picture of your income needs.

In 2007, the Center for Retirement Research at Boston, College served a 400 private sector employers. Those employers estimate that one fourth of their employees between 50 and 60 years old lack the financial resources to retire even at the traditional retirement age. If you’re like most baby boomers, your retirement expenses will be roughly 75% to 80% of your pre-retirement expenses. So you need to determine if the income derived from your 401(k), 403(b), pension or other sources could generate that. Remember that you can’t receive any Social Security benefits for age 62.

Retire with the idea that you’ll live to be 100.

With the recent advances in healthcare you might become a centenarian. Your income streams may need to last 20, 30, even 40 to 50 years. In the income streams that you have today may soon need to be supplemented or adjusted due to unforeseen needs and inflation. Many new retirees make the mistake of withdrawing income at too high a rate in the first few years after work. They live high on the hog for a while and find out that their retirement nest egg is shrinking because they are spending more than their portfolios can unpack . 2008 didn’t help that situation any more. Additionally, you may also have to pay for health insurance if you retire before age 65. All of this may point you in the direction of part-time employment rather than total retirement.

Retire with a purpose.

Leaving work behind can be exhilarating, but after the first few months of fun there can also be a now what. Any early retirement becomes better with a plan for purposeful and meaningful living irrespective of your finances.

photo credit: Vinay Deep